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Eight insurance trade organizations are speaking out against a California bill that would expand the authority of the state's Department of Insurance.
Senate Bill 1209, introduced in February, would give the California Department of Insurance the ability to require insurers to address violations identified during regulatory examinations. Currently, department examiners can identify problems with an insurer's practices, but they have to pursue separate enforcement action to make insurers comply with their recommendations.
The bill would require insurers to comply with Report of Examination directives and would allow the department to assess penalties if violations aren't corrected within a specified time frame.
This week, trade organizations, including the American Property Casualty Insurance Association, the National Association of Mutual Insurance Companies and the Insurance Information Institute, sent a letter to the bill's sponsor, Sen. Bill Allen.
The organizations voiced concern that the bill would allow the department to bypass regulatory procedures. The letter said examination recommendations "are often advisory in nature and reflect an examiner's perspective rather than the law."
"This bill is a power grab that will create uncertainty in the market as carriers will have no way of ensuring that they are complying with the law if the law can change on an examiner's whim," the letter said.
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